French Connection sees shares plummet 23% as it slumps to a £6.3m loss

Shares in troubled fashion retailer French Connection fell 23 per cent today after it reported a half-year loss following a 'disappointing' performance in the UK and Europe.

The British High Street chain, which warned it was likely to stay in the red for the rest of the year, said it slumped to a pre-tax loss of £6.3million in the six months to July 31, compared to a profit of £700,000 in the previous year.

Founder and chief executive Stephen Marks, who has called conditions the worst he has known in 40 years of trading, said: ‘We recognise that the route to sustained recovery is likely to take some time but we are committed to building on French Connection's core strengths.’

In the red: Some 15 out of 70 French Connection UK stores are likely to be closed in a bid to turnaround performance

The group, which saw a 9.5 per cent fall in UK retail sales and weakened
margins amid heavy discounting, is understood to be considering the
closure of 15 of its 70 UK stores as part of its plan to improve
performance.

But Seymour Pierce analyst Freddie George branded the turnaround plan
‘rather underwhelming’ and said he was surprised there was no major
restructuring of its property portfolio.

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He retained his forecast of a £3million full-year loss, adding:
‘Although it will be a long haul to get the company back on the recovery
track we believe the business does have value.’

French Connection, which has already announced the introduction of a new
range of premium womenswear exclusive to its stores and has broadened
its offer to include homewares in larger stores, today gave more details
of its restructuring plans following a detailed review.

Slump: Shares in French Connection lost about three-quarters of their value over the past year

Chief operating officer Neil Williams
admitted that some of its ranges had become too expensive following
price hikes in cotton in recent years and the group would use smarter
buying to return more of its prices to the ‘sweet spot’ for its
customers.

More of its ranges will be trialled
in advance to gauge their popularity in a bid to cut down on the amount
of leftover stock sold in clearance sales.

It has also improved its range of accessories and hired a former Topshop head of design to take charge of ladieswear. Other initiatives will target improved customer service through better staff training.

The business was earlier this year
dealt a blow after US department store Sears said it would end a supply
agreement for products branded ‘UK style by French Connection’ and
French said it was continuing to look for new licensing agreements.

Shares in the company, which also owns the Toast and Great Plains
brands, have lost about three-quarters of their value over the past
year.